Legislature(2023 - 2024)ADAMS 519
04/26/2024 01:30 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB174 | |
| HB169 | |
| HB232 | |
| HB260 | |
| HB368 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 260 | TELECONFERENCED | |
| += | HB 368 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 174 | TELECONFERENCED | |
| += | HB 169 | TELECONFERENCED | |
| + | HB 232 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 26, 2024
3:11 p.m.
3:11:19 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 3:11 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
MEMBERS ABSENT
Representative Frank Tomaszewski
ALSO PRESENT
Representative Kevin McCabe, Sponsor; Dave Stancliff,
Staff, Representative Mike Cronk; Joe Felkl, Legislative
Liaison, Department of Fish and Game; Representative George
Rauscher, Sponsor; Ryan McKee, Staff, Representative George
Rauscher; Honour Miller-Austin, Staff, Representative Will
Stapp; Craig Valdez, Staff, Representative George Rauscher;
Representative Jesse Sumner; Brodie Anderson, Staff,
Representative Neal Foster.
PRESENT VIA TELECONFERENCE
Zach Hanna, Chief Investment Officer, Treasury Division,
Department of Revenue; Deven Mitchell, CEO, Alaska
Permanent Fund Corporation; Nancy Hillstrand, Owner,
Pioneer Alaskan Fisheries and Coal Point Trading, Seldovia;
Tom Harris, Vice President, Cape Fox Corporation; CEO
Knikatnu, Anchorage; Emily Anderson, Alaska Director, Wild
Salmon Center, Anchorage; Flip Pryor, Aquaculture Section
Chief, Department of Fish and Game; Mark Whisenhunt, Self,
Palmer; Ian Walsh, Legislative Counsel, Legislative Legal
Services; Julie Estey, Chief Strategy Officer, Matanuska
Electric Association, Palmer; Jeremy Kasper, Director,
Alaska Center for Energy And Power, University Of Alaska
Fairbanks; Ken Huckeba, Self, Wasilla.
SUMMARY
HB 169 FISHERIES REHABILITATION PERMIT/PROJECT
HB 169 was HEARD and HELD in committee for
further consideration.
HB 174 STATE FUND FIDUC DUTY:SOCIAL/POL INTEREST
HB 174 was HEARD and HELD in committee for
further consideration.
HB 232 DISABLED VETERANS: RETIREMENT BENEFITS
HB 232 was HEARD and HELD in committee for
further consideration.
HB 260 CATASTROPHIC ILLNESS/MEDICAL ASSISTANCE
HB 260 was HEARD and HELD in committee for
further consideration.
HB 368 ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS
HB 368 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 174
"An Act restricting fiduciary actions by a fiduciary
of a state fund, the Alaska Retirement Management
Board, and the Alaska Permanent Fund Corporation Board
that have the purpose of furthering social, political,
or ideological interests."
3:13:26 PM
Co-Chair Foster invited the bill sponsor and his staff to
the table.
REPRESENTATIVE KEVIN MCCABE, SPONSOR, offered a brief recap
of the bill. The bill prioritized the financial or
pecuniary interests of beneficiaries when managing state
funds, ensuring responsible investment decisions focused
solely on financial gain. The bill reinforced and
guaranteed that state funds continue to be managed in such
a way as to ensure a maximum risk adjusted return within
established parameters. The bill strengthened efforts to
establish a sustainable long-term fiscal plan for Alaska by
eliminating external social, political, or ideological
goals from investment considerations. He stated that the
bill did not limit options for achieving maximum risk
adjusted return. The bill would align Alaska with a growing
number of states by introducing legislation that emphasized
responsible investment management and fiscal
responsibility. The bill prohibited practices like board
stacking ensuring members of predominant boards prioritize
financial gain and refrain from advancing external non-
pecuniary interests. He relayed that passage of the bill
would be a significant step forward in responsible
investment management for Alaska, safeguarding citizens'
financial interests for the state's long term benefit.
Representative McCabe stated that the bill would ask the
state's large funds to maintain focus on achieving the
highest possible rate of return within the established risk
parameters for fiduciaries. He elaborated that the bill
would mean Alaskans could trust that their financial
interests were being protected, contributing to confidence
in the state's management and fostering a stable economic
environment. He hoped it would fortify the development of a
durable and sustainable long-term fiscal strategy for the
state devoid of trends or influences. He thanked the
committee for hearing the bill.
Co-Chair Foster OPENED public testimony.
Co-Chair Foster CLOSED public testimony. He provided the
contact information for written testimony.
Co-Chair Foster asked for a review of the fiscal notes. He
began with the fiscal note from the Department of Revenue
(DOR).
3:16:54 PM
ZACH HANNA, CHIEF INVESTMENT OFFICER, TREASURY DIVISION,
DEPARTMENT OF REVENUE (via teleconference), reviewed the
fiscal note from DOR, control code cQJja. He began by
stating that the Alaska Retirement Management Board (ARMB)
and Treasury Division staff were very focused on the
state's long standing fiduciary duty covered under AS
37.10.071(c) to invest in the sole financial best interest
of the roughly $50 billion in funds collectively managed by
the department. He relayed that the investment standard was
higher than that of most states, which had been critical in
avoiding some of the problems highlighted by the bill. The
department had no issue with the intent of the bill, and it
would not change what the department invested in. He added
that aspects of the bill were helpful in clarifying the
existing fiduciary standard.
Mr. Hanna relayed that the department's primary concern was
related to the section of the bill [Section 1] specifying
that "an action is considered to have the purpose of
furthering a social, political, or ideological interest if
evidence indicates a commitment to" a series of five
specific activities. He stated that some of the underlying
companies and stock market index funds and elsewhere in the
funds managed by the division were engaged in some mix of
the five activities. He pointed out that it was despite the
investments having been made only in the sole financial
best interests of the funds managed by the division.
Mr. Hanna remarked that the fact the division invested in
the companies may be considered evidence by some that the
investments were questionable or not permitted under the
language in the bill. He understood that was not the intent
of the legislation; however, they were hot button issues
for the press, public, and special interest groups who may
misinterpret the language in the bill. Consequently, the
division would anticipate an increase in information
requests and testimony and engagement with ARMB and staff,
and the potential for a recurring need to prove that the
fiduciary standard was being followed in even easily benign
investment cases or to prove a negative that ARMB and staff
were not engaged in investment for social, political, or
ideological reasons when that had never been the case.
Mr. Hanna stated that the research could be time consuming
and either supplanted existing investment activity or
called for more staff resources. The division had no issue
doing the additional work if it was needed from a policy
perspective, but the division was a small organization
running at lean staffing levels. The division was
requesting an additional investment officer in its fiscal
note. He relayed that he would be remiss in painting the
need for the resource as a certainty. He clarified that the
fiscal note was an estimate based on the division's
expectations given the current environment. He understood
there could be differences of opinion. He elaborated that
the resource lift could be low, or it could be high
initially and taper off over time. The division operated
under a microscope through a public process, which was
totally fitting due to its management of public assets.
Ultimately, the division would fold into its workflow
whatever policy path was laid out by the legislature
regardless of resource addition. He thanked the committee
for its time.
3:20:40 PM
Representative Galvin stated her understanding that the
funds were presently managed under the prudent investor
rule, which ensured a comprehensive consideration of all
things that an investor should consider. She imagined that
a prudent investor would want to be aware of any changes in
the market that may come about due to social, political, or
ideological factors. She wondered how much the bill may
hamper the division as fund managers and worrying they may
run afoul with the proposed statute. She understood it was
difficult to know the direction of the market. She noted
that Mr. Hanna had mentioned being under a microscope
already and she was not certain one [additional] investment
officer would be sufficient to address all of the questions
that may come as a result of the bill.
Mr. Hanna responded that the prudent investor rule was part
of AS 37.10.071(c) and the prudent investor rule was fairly
common across state funds. He quoted a piece of the
statute, "apply the prudent investor rule and exercise the
fiduciary duty in the sole financial best interest of the
funds." He explained that Alaska's statutory standard was
higher than most states had. He clarified that the division
did not believe the bill would constrain its ability to
invest in the highest risk adjusted returns or in the sole
financial best interest of the funds. He believed the
language may be misinterpreted by some and may call into
question those investments even though they had been made
according to the standard and that defending those
investments may be time consuming. He noted that the
division had seen the topic over the years. He shared that
in 2000 he had done a fairly sizeable research project on
ESG [environmental social governance] investments when the
board had been approached over a series of meetings and
years to make investments that were arguably in line with
social, political, or ideological interests. He had
presented the research to the board and the board had
adopted its position as reiterating the underlying
fiduciary standard and that all aspects touching on risk
and return should be borne in mind when making investments,
but investments should only be made if they were in the
sole financial best interest of the plans.
3:24:28 PM
Representative Josephson provided a hypothetical scenario,
excluding the controversy related to the Alaska Permanent
Fund Corporation (APFC) investing $200 million in the State
of Alaska, which he believed was fairly unique. He
considered a scenario where the state wanted to invest in
[the oil company] Santos (with the Pikka project west of
Prudhoe Bay) and the company was under orders from its
Australian board to promote carbon capture, utilization,
and storage (CCUS). He believed the main point of CCUS was
to eliminate greenhouse gases. He detailed that even though
the state's interest in investing in Santos may be to make
money, Santos was interested in making money, while keeping
the climate as carbon-free as possible. He asked if Mr.
Hanna would interpret the situation to mean the state could
not invest in Santos.
Mr. Hanna clarified that he was the CIO of the DOR Treasury
Division and not APFC. He wondered if Representative
Josephson may want to direct his question to APFC.
Representative Josephson asked if Mr. Hanna's office did
not have any oversight over ARMB.
Mr. Hanna replied that his office had oversight over ARMB,
but the specific issue Representative Josephson was asking
about was APFC related.
Representative Josephson asked Mr. Hanna the same question
relative to ARMB.
Mr. Hanna answered that the hypothetical scenario touched
on a potential additional issue that he had not commented
on previously. He explained that ultimately any investment
made under existing statute and under the proposed
legislation would have to be in sole financial best
interest of funds managed by the Treasury Division. That
being said, some of the investments were with companies
that engage in some of the five activities listed in the
bill. The scenario used by Representative Josephson fell
under the first of the five listed. He did not believe it
would prohibit investment in something if a company engaged
in offsetting or disclosing greenhouse gas emissions,
provided the investment was driven solely for financial
reasons; however, the mere fact of making an investment
like that became challenging for the board and staff
because it may provide evidence in the minds of some that
the investment had been made for the purpose of social,
political, or ideological interests. He stated that
defending it and clarifying for the public that it was not
the case, could be time consuming.
3:28:48 PM
Representative McCabe responded to the question by
Representative Josephson. He stated that in competitive
labor markets and product markets corporate managers were
trying to maximize long-term shareholder value and they
should of their own accord pay attention to employee,
customer, community, and environmental issues, which is
what Santos did. He stated that the bill specified the
primary focus of ARMB and APFC should be to maximize the
money coming in that would be supplied to the Permanent
Fund to fund government or to retirees. He indicated that
they should only be focused on the pecuniary money coming
in and not the secondary or tertiary carbon sequestration.
Co-Chair Foster noted that the DOR fiscal note was OMB
component 121. He asked for a review of the APFC fiscal
note, OMB component 109.
3:30:17 PM
DEVEN MITCHELL, CEO, ALASKA PERMANENT FUND CORPORATION,
JUNEAU (via teleconference), reviewed the indeterminate
fiscal note control code zTKkm from APFC. He stated that
that the fiscal note incorporated some of the thought
process Mr. Hanna had discussed with the committee. He
relayed that through the course of discussions with the
bill sponsor and his staff, APFC determined there was a
pretty clear path to adjusting its fiscal note through
potential clarifications on the record of the bill's intent
and/or a minor amendment to the bill. He remarked that the
bill could be read in two different ways. He elaborated
that the term "board" was critical because the board may
not take an action that led to some of the activities
described in the bill being priorities of staff. He
explained that with that context, the bill was concerning
from a fiscal impact perspective because staff would
continue to invest the fund with the intent of preserving
purchasing power of the fund and maximizing expected
returns, but the APFC board would be restricted from
mandating that staff invest based on the criteria
identified in the legislation. The corporation understood
the bill sponsor's intent and looked forward to the
continuation of the conversation.
Representative Josephson asked if the bill would prohibit
APFC from considering a divestment from a firearms
manufacturer because they were a firearms manufacturer. He
provided a hypothetical scenario where the board considered
that there were 100,000 people shot per year and 40,000
killed by firearms and that it would be possible to make as
much money investing somewhere else. He wondered if it
would be consistent with the prudent investor rule.
Mr. Mitchell responded that based on his understanding of
the sponsor's intent, the board may not take an action that
would prohibit APFC from investing with a firearms
manufacturer (for example), but the level of restriction
would not change the way APFC staff would consider
investments' risks and rewards for purposes of determining
whether they fit into the APFC portfolio. From a prudent
investor perspective, APFC staff would continue to do the
same activities they did presently in identifying the best
investments for the fund. Under the legislation, staff
would do so with the knowledge that a board could not
direct staff against investing in the fashion described in
the five ways listed in the bill.
Co-Chair Foster believed Fadil Limani with DOR was trying
to call into the meeting and may want to add to the
conversation.
Representative Hannan referenced an earlier question by
Representative Josephson directed to DOR. The question had
pertained to APFC's use of $200 million towards Alaska
business investments three or four years earlier. She asked
if the bill would require a different analysis or
restriction on APFC's ability to choose to do an Alaska
specific investment. It was her understanding the board
decided to make the investment even though it was taking a
greater risk in some of the investments because they did
not have a long financial track record.
Mr. Mitchell replied that he did not think the bill would
do anything to change the board's ability to consider asset
allocation or investment policy decisions that may
incorporate deploying money in Alaska. There was a statute
specifying that to the extent risk and reward were equal
that APFC should consider or favor Alaskan deployment of
money for investment purposes. He looked at the five
categories in the legislation and highlighted eliminating,
reducing, offsetting, or disclosing greenhouse gas
emissions as an example. He stated it would become one of
the limitations of the powers of the board. He explained
that the board would not be able to mandate that APFC
invest with that outcome, rather it could have an
additional program in Alaska or in a different asset class
anywhere as long as it met the other standards in the
prudent investor rule and statutory framework of the
corporation.
Representative Hannan considered a hypothetical scenario
where the carbon sequestration industry started to flourish
in Alaska and an Alaskan company was established with that
intended purpose. She remarked that because it was a
nascent industry there was not a long investment record.
She wondered if the bill would restrict APFC from being
able to invest in the companies arising in the carbon
sequestration industry over the next 20 years.
3:38:54 PM
Mr. Mitchell responded that as long as the bill was
interpreted as he had described where the check was at the
board action level, there should not be an impact because
staff would still analyze each investment opportunity on
its own merits. He stated it would not be under the
directive of the board to deploy money specifically into
the area based on a mandate at the board level, but it
could still be deployed in the area to take advantage of
economic opportunity or location to benefit the returns of
the corporation on behalf of the fund.
Representative Coulombe asked about the phrase "for the
purpose of furthering a social, political, or ideological
interest." She thought it seemed pretty clear that the bill
was directing investments to those making for the fund. She
stated it did not seem to appear to say the funds could not
invest in companies that were doing these things. She asked
if it was the phrase APFC was concerned about. She wondered
if the phrase was clear or needed clarification.
Mr. Mitchell believed Representative Coulombe was
referencing AS 37.13.120(f)(2). He had not focused on those
criteria specifically. He referenced his interpretation
based on conversations with the bill sponsor's staff that
the restrictions were prohibited for the board to mandate,
not for staff to participate in investments that may
otherwise fall within the criteria; the bill would mean
investments would not be based on a mandate of a board, but
on the fiduciary standards and criteria that were followed
to maximize return of the fund. He stated that as long as
that was the interpretation, it became much less concerning
from his perspective. He noted that it was already the way
the fund operated to maximize return; APFC did not manage
for social, environmental, or governmental change reasons.
Representative McCabe agreed with the statement by Mr.
Mitchell. He did not want the board to be changed or
stacked to be able to mandate staff to not invest in any
oil companies because oil was bad, even though the oil
companies in the portfolio were currently the highest
performing companies. He highlighted a hospital doing a
surgery the board did not like as another hypothetical
example. He did not want divestment in a high paying
company because of something it did. He thanked the
committee for its time.
Co-Chair Foster Amendment set an amendment deadline for
Wednesday, May 1 at 5:00 p.m.
HB 174 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 169
"An Act relating to certain fish; and establishing a
fisheries rehabilitation permit."
3:44:34 PM
Representative Cronk offered a brief overview of the bill.
He stated that the idea of establishing a fisheries
rehabilitation permit for certain fish came about seven
years back with former Representative Dave Talerico due to
fish issues on the Yukon and Kuskokwim Rivers. The concept
was a result of thinking outside of the box to come up with
tools to rebuild wild chinook runs on the Yukon or any
other place the situation was occurring. He relayed that
the bill would increase the limit of rehabilitation permits
already allowed by the Department of Fish and Game (DFG).
He noted that a representative from the department was
present to provide additional information.
Representative Cronk reviewed that there were segregated,
integrated, and conservation hatcheries. The bill did not
fall under any of the aforementioned categories. The bill
related to enhancing survival of wild salmon in their
natural habitat using portable nonpermanent operations and
equipment. He clarified that it was not a hatchery. The
bill would utilize the benefits of advanced portable
equipment. He elaborated that fish would be returned to
their natural watershed as developed eggs or emerging fry.
He detailed that there was no artificial rearing, feeding,
and imprinting challenges. Additionally, operations would
avoid the expensive capital costs of permanent hatchery
facilities, operations, and domestication issues. He stated
that the process complimented Alaska's escapement
management approach towards maximum sustainability by
addressing the discreet subpopulation of salmon that
current escapement management models could not address.
Representative Cronk disputed the rhetoric that the bill
would enable anyone to grab a permit, hatch fish in their
backyard, and dump them in the river. He had also heard the
claims the practice allowed under the bill would create
potential inbreeding, competition, and disease. He
clarified that the bill would not allow any of those
things. He emphasized that the permits would be highly
regulated through DFG.
3:47:27 PM
JOE FELKL, LEGISLATIVE LIAISON, DEPARTMENT OF FISH AND
GAME, noted that Aquaculture Section Chief Flip Prior was
available via teleconference for any programmatic or
permitting questions. He relayed that DFG had worked with
Representative Cronk and previous bill sponsors in the past
on the topic to make the bill workable for DFG to
implement. The department had no concerns with the bill.
Co-Chair Foster relayed that the committee would hear
public testimony followed by a review of the fiscal notes.
He OPENED public testimony.
3:48:56 PM
NANCY HILLSTRAND, OWNER, PIONEER ALASKAN FISHERIES AND COAL
POINT TRADING, SELDOVIA (via teleconference), shared that
she had been in the business for over 50 years. She added
that she had also been a DFG fish culturist for 21 years
and understood enhancement well. She had raised chinook,
coho, sockeye, pinks, and chums. She highlighted that
chinook were very difficult to raise. She understood that
the eggs would be put in the gravel; however, chinook were
in a very stressed situation at present. She did not
believe it was a good idea to have people taking more brood
stock from stressed situations. She opposed HB 169. She
knew everyone desired to help collapsing salmon
populations, but it would not happen in a vacuum. She
emphasized that decades of misguided management needed to
be addressed and factors needed to be acknowledged. She
stated the bill was duplicative and created another costly
loose end with no monitoring or safeguards on already
stressed populations. She added that any monitoring would
be very costly.
Ms. Hillstrand thought the practice allowed in the bill may
worsen disease and it added stress. She asked the committee
to consult the expertise of DFG aquatic resources
permitting staff. She explained that the program was
already in place and structured in a three step
classification program: small for 500 eggs, medium up to
50,000 eggs, and larger for propagating for accredited
institutions, tribal entities, federal, state, or other
local entities. She stated that using an aquatic resources
propagation permit instead of another additional measure
was a more measured cost-effective way that was already in
place. She detailed that the bill would create costly
repercussions not anticipated to already stressed
populations of salmon. She stressed that 500,000 eggs were
much too large an impact with little to no oversight. She
remarked that the state needed to face how management
decisions were affecting populations. She noted that the
old ways were obviously not working. She highlighted that
the sustainable salmon policy 5 AAC 39.222 urged the
precautionary approach. She emphasized that if the goal was
to sustain salmon, precaution needed to be applied
immediately to save money, time, and energy. She asked the
committee to oppose the legislation. She believed there had
to be a better option than applying a band-aid.
3:51:28 PM
Representative Josephson believed Ms. Hillstrand wrote on
the topic occasionally. He recalled the bill from the late
teens. He noted that Ms. Hillstrand had encouraged
committee members to contact the DFG aquatic resources
permitting staff. It was his sense that DFG supported the
legislation. He asked if the staff were independent
thinkers who would be comfortable speaking to legislators.
Ms. Hillstrand responded that a lot of DFG staff were not
allowed to speak to the legislature or to the Board of
Fisheries. She shared that she had worked with the Board of
Fisheries for decades. She noted there was a problem there;
however, when she had called the aquatic permitting staff
had been very helpful and had told her about the three
stages they went through. She considered the bill and
thought there was a better way. She wondered why add a
duplicative layer when there was something already in
place. She had been told by the staff that they wanted to
make sure people were interested and would take care of the
fish and they started out with a small [number of fish].
She thought a step by step situation was much better than
allowing people to take 500,000 eggs. She remarked that it
was a substantial amount of king salmon to take out of a
population. She noted that the fish stocks in each of the
river systems were distinct and people would want to take
500,000 eggs from each area. She stated it was a lot of
work and to do it right it would require a substantial
amount of money. She suggested starting with aquatic use
permits if the action was going to take place. She thought
the top rung of the classification program gave people
enough time to learn instead of letting people who were not
qualified to be out there taking eggs. She relayed that
aquatic use was not the commercial side of DFG and she
thought it was important to stay away from the Commercial
Fisheries Division. She believed that if the goal was to
support the fish that starting out slow was the right way
to go.
3:55:01 PM
Representative Galvin asked if Ms. Hillstrand was
suggesting that DFG's current program was a better more
incremental way to go so that individuals knew what they
were doing before they got to the larger size removal. She
stated her understanding that 500,000 was the largest
number [of eggs] and there were also small and medium
categories.
Ms. Hillstrand agreed. She explained that HB 169 let people
take up to 500,000 eggs. She emphasized that for Coho and
chinook it was a lot of eggs/female fish to take from the
wild. She detailed that people were not that good at fish
culture or handling eggs. She recommended going through the
aquatic resource permit to start individuals out slow. She
had been told by the aquatic permitting staff that they
wanted to know a person could handle 500 eggs first before
increasing to the next level. She stated the second level
was 10,000 eggs and she thought the third may be 100,000
eggs. She stressed the need to go very slowly when working
with enhancement. She stated that opening the barn door
wide open would be very dangerous for fisheries while they
were down.
3:57:04 PM
TOM HARRIS, VICE PRESIDENT, CAPE FOX CORPORATION; CEO
KNIKATNU, ANCHORAGE (via teleconference), shared that the
Fog Woman [totem pole] was located in downtown Ketchikan
and it described the reseeding of salmon that had been
taught to him as a child by his grandmother. His
grandmother had taught him that if a salmon was taken out
of the mouth of the river, there was a moral, ethical, and
cultural obligation to finish the journey for the salmon.
He described taking the eggs and milk and mixing them into
cool, bubbling water. The carcass was taken upstream, and
the process was done in cedar baskets. He was disappointed
in the previous testimony. He stated that the legend was
14,000 years old, and he believed it was important for
sports fishermen, commercial fishermen, and the government
to know that if people were not reseeding the resource, it
did not reflect harvesting but mining. He stated there were
excellent examples worldwide from New Zealand to New York
State of people using versions of the same process. He
highlighted that the process was legal in Washington,
Oregon, California, and the Great Lakes. He stated it was
important for salmon to be in their home river. He
highlighted the natural process and remarked that it was
not happening in hatcheries. He relayed that in 2022, New
Zealand announced they were taking over the world's king
salmon market; the country was now collecting large salmon
from its rivers due to reseeding programs. He stated it was
not rocket science. He referenced the large percentage of
kings and chum coming from hatcheries in Alaska and stated
it was not a healthy system. He stated it was an ancient
custom practiced around the world and it was time to be
able to practice it at home.
4:01:07 PM
EMILY ANDERSON, ALASKA DIRECTOR, WILD SALMON CENTER,
ANCHORAGE (via teleconference), testified in opposition to
the bill. She appreciated the bill sponsor's desire to
boost fish populations in areas where numbers were down;
however, it had been found that over many decades that
rehabilitation using hatchery enhancement could have
numerous unintended consequences that could make the
situation much worse. She stated that Alaska had taken a
fairly careful approach to hatchery development in state
waters to ensure the protection of wild salmon stocks. She
elaborated that while it was not perfect, Alaska's current
fish enhancement and hatchery development policy sought to
segregate wild fish from hatchery fish where possible to
avoid interbreeding, competition, and harvest management
problems. The current law also established safeguards to
protect wild fish from disease and inbreeding.
Ms. Anderson had heard committee discussions that attempt
to distinguish rehabilitation projects from hatchery
enhancement projects; however, both were hatcheries and
both shared the same risk. She stated that although the
bill required the commissioner when issuing a permit to
determine that the project would not harm indigenous wild
fish stocks, there were no requirements in the bill to
segregate hatchery fish from wild fish. Additionally, the
bill did not contain safeguards to prevent inbreeding or
disease outbreaks and there were no requirements for the
permit holder to have any qualifications. She stated that
since the risk to wild fish was so high at the current
point, it should not be an option to waive or weaken
safeguards simply because a permitted operation was
smaller. She explained that it all had ramifications
because HB 169 specifically targeted weak stock fisheries
that were struggling and needed the most care.
Ms. Anderson relayed that the permitted activities under
the bill were not eligible for areas with healthy fish
populations. She remarked that unfortunately the bill set
up a process that mirrored rehabilitation efforts in the
Lower 48 that had only continued to drive depleted wild
salmon populations to the brink. She stated that the
efforts had reduced genetic diversity and the overall
fitness of populations, making those fish less successful
at reproducing in the wild. Additionally, the efforts had
increased competition for struggling populations. She
elaborated that decades of scientific research indicate
that fish rehabilitation projects did not restore depleted
stocks and only masked the problem for a period of time.
She explained that it made it difficult later on for wild
salmon stocks to recover when conditions improved
naturally. She supported taking a careful approach to
protect weak stocks and help them rebound. She supported
focusing efforts on habitat rehabilitation and strong mixed
stock fisheries management and trying to resist the
temptation to fix the problem by increasing numbers through
hatchery rehabilitation. She added that if a tribal entity
or community really wanted to pursue a rehabilitation
project, DFG already had a permitting process in place that
made the bill unnecessary. She noted the safeguards in the
current process were higher and stronger than those
outlined in the bill. She encouraged the committee to vote
against the legislation.
4:05:03 PM
Representative Ortiz asked Ms. Anderson to review her
experience in the field.
Ms. Anderson responded that she was the Alaska director for
the Wild Salmon Center. She is an attorney with a
bachelor's degree in fisheries biology. Additionally, she
worked closely on the testimony with the organization's
science director who was a Ph.D. fisheries scientist.
Representative Ortiz asked if the Wild Salmon Center had a
stance on hatcheries and aquaculture activities in general.
Ms. Anderson responded that the organization did not have
an official position on aquaculture. She believed it had
been evident over time that some wild fish populations in
the U.S. had suffered from aquaculture and hatchery
enhancement projects. In Alaska, most of the hatcheries had
been set up to try to minimize that damage and segregate
hatchery fish from wild stock. She state that the bill was
of concern to the organization because it basically took
hatchery fish bred outside of natural conditions in
incubator boxes and allowed them to be dumped on top of
wild stocks that were really struggling to survive. She
clarified that the concern was not about being anti-
hatchery in any way; it was about trying to protect
struggling, weak wild stocks.
Representative Ortiz noted that the sponsor statement for
the bill specified that one of the benefits of the program
was to enhance habitat in state water for survival of the
fish. He asked for verification that Ms. Anderson had
testified it would have the opposite impact.
Ms. Anderson understood that part of the bill specified
habitat rehabilitation should occur. She supported that and
believed habitat restoration was one of the things humans
could do to really help wild stocks. She clarified that she
did not think it was productive to have wild stocks
harvested, reared, and placed back with wild stocks (to
compete with eggs naturally hatching in river systems) by
individuals who were not qualified to do so.
Representative Cronk asked how the Wild Salmon Center was
funded.
Ms. Anderson responded that the organization was funded by
private donors, individuals, and grassroots organizations
including people who hunt and fish and care deeply about
Alaska fisheries.
4:09:01 PM
Co-Chair Foster CLOSED public testimony. He asked for a
review of the fiscal note by DFG.
Mr. Fekl reviewed the DFG fiscal note, control code lyoAo.
He detailed that the bill would create a new permit
program, similar to the existing aquatic resource permit
already offered by the department for scientific and
education purposes. The new fishery rehabilitation permits
would be available to the general public. Permit
applications would be incorporated into current processes
for existing permits such as the aquatic resource permit
and would receive the same level of rigorous review. The
permitting process would include analysis by DFG staff and
public engagement for any projects involving salmon,
through the regional planning team process.
Mr. Fekl elaborated that the Aquaculture Section under the
Division of Commercial Fisheries would be responsible for
reviewing the permit applications. He relayed that the
section had been reduced by half in the past six years and
did not have the resources to take on additional work.
While the department did not expect the new workload to
rise to the level of a full-time position, the department
anticipated the need for a part-time seasonal position. The
position would assist with managing the new permit program
during high application times such as egg take season. The
fiscal note reflected an increase in personal services cost
to the Division of Commercial Fisheries in the amount of
$52,400 for a six-month part-time biologist 2 position
located in Juneau. Additionally, the bill proposed a $100
application fee. Presently, the number of applications the
department would receive was unknown; therefore, the fiscal
note was indeterminate pertaining to changes in revenue.
Representative Hannan asked if the application fee for the
current permits was $100 and whether there was any
requirement for bonding under the current research permit
if something went wrong.
Mr. Fekl deferred the question to a colleague.
4:12:08 PM
FLIP PRYOR, AQUACULTURE SECTION CHIEF, DEPARTMENT OF FISH
AND GAME (via teleconference), responded that currently the
aquatic resource permits did not have a $100 fee and there
was no bonding requirement.
Representative Hannan asked if there were bonding
requirements for hatchery permits or if the state accepted
all liability if something went awry.
Mr. Pryor replied that he was not aware of any bonding
requirements through its permitting process.
Representative Ortiz referenced Representative Cronk's
testimony that there was a similar existing process for
projects to go forward. He asked what the legislation did
to try to expand the participation in programs. He asked if
it targeted groups that could not currently access the
existing program. He asked what types of groups those may
be.
Mr. Felkl responded that the current permits had to be for
education or scientific purposes. He clarified that
existing permits could not to rehabilitate a depressed run,
which was the intent of the bill. The bill would expand the
permit from education and scientific entities such as
schools to the general public. He directed members to page
4, line 23 of the bill including the definition of person,
which could include an individual, corporation, business,
partnership, tribe, government, government subdivision,
agency, and other.
Representative Ortiz stated his understanding there would
be a stripping of the eggs and he wondered about the next
stage. He wondered if the eggs would go into a protective
environment to increase survival capabilities predators and
things like that.
Mr. Felkl responded affirmatively. He explained that it
would be protecting the eggs at one of their most
vulnerable states. He deferred to Mr. Pryor for additional
detail.
Mr. Pryor added that the purpose of the practice would be
to protect the eggs during the development stage. He
elaborated that when eggs were in the gravel, they were
vulnerable to multiple things including environmental
factors such as freezing. Typically, the process would
involve a salmon egg box, which was a box with some
upwelling water to keep eggs from freezing and allowing
them to grow in a protected environment.
4:16:46 PM
Representative Ortiz asked what knowledge a person would
need in order to place one of the boxes in a wild stream
setting. He referenced Mr. Pryor's description of creating
upwelling and protecting eggs from freezing. He asked if it
was a fairly simple task or if a person would need a strong
background on the subject.
Mr. Pryor responded that the process was not very
difficult. He explained that the boxes could be built out
of plywood and PVC piping or purchased commercially. Part
of the permitting process would require an applicant to
submit a plan. He relayed that DFG has expertise within the
department to help applicants have the most successful
program possible.
Representative Coulombe referenced the sponsor's remarks
that the bill had been around for some time. She asked what
some of the problems had been and why the bill did not pass
the last time. She asked if the bill reflected any changes
from the original attempt.
DAVE STANCLIFF, STAFF, REPRESENTATIVE MIKE CRONK, responded
that the primary issue in the past was that the state was
not running out of the options that now seemed to be
running out. He elaborated that the crisis in the Yukon had
not reached the point where there was legislation
introduced to talk about closing areas entirely. He
explained that the timing of the request had been different
than it was at present. He stated that most importantly,
the legislation had been tweaked to give the commissioner
the ability to shut a permit down, the oversight was
greater, and the requirements people had to go through were
more stringent. The bill aimed to ensure the department did
its part in making sure anyone entering into the endeavor
(e.g., a school system, corporation, or tribe) was
qualified.
4:19:44 PM
Representative Hannan directed a question to Mr. Pryor. She
stated her understanding of the bill that qualifying
applicants could receive a permit for a period of five
years and 500,000 eggs. She provided a hypothetical example
where a person wanted to rear king salmon and opted to grow
100,000 eggs per year for five years. She noted that king
salmon leaving [the rivers] may be gone for three to six
years. She asked if there was any obligation to have some
measure of success before a permit holder made their next
collection of eggs. She considered a scenario where the
first class of 100,000 were very successful but they did
not return for five years and the second class returned
small in size but after three years in the ocean.
Mr. Pryor responded that part of the five-year design in
the permit pertained to a life cycle. He stated that the
purpose of a rehabilitation program was the goal of putting
return spawners on the spawning grounds to continue
spawning generations. The idea was to take a low stock and
build it up. He explained that if the permit was issued and
a person utilized a plan as in Representative Hannan's
example, the first fish would return in small numbers as
three-year-olds, four-year-olds would likely be the
dominant return, and five-year-olds to seven-year-olds
could return if the species was chinook. He elaborated that
after that time period the permit holder would be finished
with the specific permit. He detailed that applicants would
want to look at whether they were producing fish because
their goal of a rehabilitation program was to build stocks
back up to historic numbers. He stated that it was part of
the application and review process, but a lot of it was on
the applicant to decide if they were accomplishing what
they wanted to accomplish.
Mr. Felkl added that the bill required a permit holder to
collect and provide data and reports as requested by DFG.
The department would have continued oversight.
Representative Hannan had heard from fisheries biologists
that most of the current problems were happening in the
ocean, so a program may not seem successful because very
few fish were returning. She considered that the
application fee was fairly low, and a person would not have
a large investment in infrastructure and buildings. She
asked how the state would decide how long a person could
continue to get a permit. She asked if it was on the
department to decide ahead of time that if a permit holder
did not have a return of 10 percent or 50 percent they
could not go forward. She asked if a person could keep
cycling through five-year permits as long as they were not
polluting or damaging wild stock.
Mr. Felkl responded that during the department's review of
the bill it considered potentially requiring fin clippings
to track the fish. He believed a permit holder would be
limited to the five-year period, but he asked Mr. Pryor to
weigh in.
4:24:50 PM
Mr. Pryor responded that the five-year permit would be a
limit on a site. A project would be able to commence for
one life cycle in a specific location. He clarified that
the department would not re-permit for the same location
five years later. He elaborated that the department wanted
returning adult fish on the spawning grounds helping with
the stock and did not want to continually do the hatchery
bucket for more than one generation. An individual could
apply for another permit for a different location.
Representative Josephson replied to Representative
Coulombe's earlier question. He relayed that when the bill
was sponsored by former Representative Talerico, it would
have been the 2017 and 2018 session. Representative
Josephson along with former Representative Geran Tarr had
been the co-chairs of the House Resources Committee and he
recalled the fundamental concern had been about the wild
salmon stock, which was the reason they had not advanced
the bill.
Co-Chair Foster stated it was his intent to set an
amendment deadline for the following day at noon; however,
he could be flexible with the deadline if people thought
they may have amendments.
Representative Josephson stated there were a number of
amendment deadlines. He asked when Co-Chair Foster expected
to hear the bill again. For example, if the bill would not
be heard until Tuesday, he asked if a Monday deadline would
be adequate.
Co-Chair Foster relayed that the bill was currently
scheduled again for Monday at 9:00 a.m., but he would
extend the deadline to noon on Monday.
Representative Hannan remarked that it was already 4:30
p.m. on Friday and she knew Legislative Legal Services had
staff working all of the time at present; however, she
thought it seemed unrealistic to give them an amendment on
Friday evening and have it back the following day.
Co-Chair Foster set the amendment deadline for 5:00 p.m.
for Monday. He asked if the sponsor had any closing
remarks.
Representative Cronk thanked the committee for hearing the
bill. He thought committee members were confusing the bill
with hatchery fish. He underscored that the process in the
bill used wild fish harvested out of rivers. He clarified
that the process involved using wild fish eggs harvested
from a river and put back into the same location. He
emphasized that the bill did not impact wild stock. The
process enhanced the fertilization rate from 5 percent to
90 percent. He highlighted that people had not been fishing
on the Yukon for four years and they would not be able to
fish for another seven years because of a treaty. He
relayed that the dam location in Canada had seen fewer than
200 chinooks return. He stressed that a tool was needed to
enable people to rebuild the wild stock in order for people
to fish again. He noted it would enable any entity to take
on the process. He added that it would be difficult because
some tributaries were hard to reach, but it would provide
an opportunity. He reiterated the bill only pertained to
wild fish. He wondered what would happen if the state sat
by and watched the wild stock deplete until there was no
fish. He wondered what the state would do at that point. He
asked if hatchery fish would be used to rebuild the stock.
He would much prefer to have the tool available in order to
rebuild the wild fish stock.
Co-Chair Foster relayed that he had subsistence users on
the Yukon and in western Alaska who were hurting. He shared
that he had recently visited the village of Gambell, and
residents had such low income they relied on being able to
subsist. He thought anything the state could do to help
them was a good idea. He thanked the bill presenters and
the department.
HB 169 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 232
"An Act relating to retirement benefits and military
service."
4:32:57 PM
REPRESENTATIVE GEORGE RAUSCHER, SPONSOR, read the sponsor
statement (copy on file):
House Bill 232 allows Veterans who are totally and
permanently disabled to access their accrued PERS
retirement benefits without penalty. HB 232 also
allows military service, which has been purchased in
accordance with the PERS standards to count towards
the credited service requirements for normal
retirement.
Veterans who are totally and permanently disabled
struggle to work and keep gainful employment due to
their service-connected disabilities. As such, this
class of veterans often struggles with income
stability. If HB 232 becomes law, it will provide
disabled veterans with access to their PERS retirement
benefits at a time when they need it most.
HB 232 does not provide any additional benefits beyond
those rightfully earned by veterans through their
dedicated public service.
By passing HB 232, the Legislature will help provide
stability to our disabled veterans when they need it
most.
Representative Rauscher asked his staff to review the
sectional analysis.
4:34:31 PM
RYAN MCKEE, STAFF, REPRESENTATIVE GEORGE RAUSCHER, went
through the sectional analysis (copy on file):
Section 1: AS 39.35.370(a)
This section amends AS 39.35.370(a) to add additional
language related to eligibility requirements when a
terminated employee is eligible for a normal
retirement benefit. Specifically adding new
subsections, A and B to section 1, lines 7 through 10.
Section 2:
Repeals three statutes.
Mr. McKee believed there was an individual online to
provide invited testimony.
MARK WHISENHUNT, SELF, PALMER (via teleconference), spoke
in support of the legislation and provided prepared
remarks:
I am advocating for disabled veterans. I hope you all
support HB 232 for the following reasons. Disabled
veterans often face challenges like limited employment
opportunities, difficulties in accessing quality
healthcare, and higher rates of mental health issues
such as PTSD. The transition to civilian life can be
particularly challenging. Some service members find
themselves contributing to their communities through
state and local government roles.
As they make the transition from active duty to
civilian life, veterans often downplay the physical or
emotional impact of their service; however, its
important to recognize that for some, these impacts
simply cannot be ignored. There's a class of veterans
who are totally and permanently disabled and they face
even greater struggles for work and gainful employment
due to their service connected disabilities. As such,
this class of veteran often struggles with income
stability.
I am one of those veterans who is now permanently
disabled. I served my country for five years and I
would do it again without hesitation. I did not fully
realize the impact of service connected conditions
when I first finished my active duty time. Through the
years, not only have I personally experienced these
challenges, but I have watched many of those I served
with face similar obstacles. I recently realized that
something could be done to help and that you all have
the power and ability to make a difference.
HB 232 could serve a crucial role in addressing the
unique needs of disabled veterans in state and local
government service. Your support and advocating for
and ensuring the implementation of this legislation
emphasizes our unwavering support to those who have
devoted their lives to serving our country and our
community with pride and distinction. HB 232 provides
a means for totally and permanently disabled veterans
to access the retirement benefits they earned through
their state and local service at a time when they need
it most. It offers vital support and truly serves as a
lifeline for disabled veterans as they navigate the
financial, physical, and emotional challenges
associated with their service-connected disability.
Inaction on this matter would not only run counter to
our shared values, but it would be a disservice to
those who have given so much for our nation, our
state, and our local communities. I'd like to share
some statistics in response to the fiscal note. Less
than 4 percent of all veterans have been deemed
totally and permanently disabled by the Department of
Veterans Affairs (VA). The VA authored a study in 2019
on the mortality rate of 100 percent service-connected
disabled veterans. The study revealed the small group
of U.S. veterans have a significantly diminished life
expectancy when compared to the civilian population of
the United States. Women veterans have a 22 percent
reduced life expectancy and men have an 11 percent
reduced life expectancy. It means that our disabled
veterans are dying on average, 15 years sooner than
their civilian counterparts.
So how many disabled veterans currently have a PERS
account? The Retirement Division does not collect that
data, but in the makeup of our state, we can get an
estimation. The estimation is derived by looking at
the number of applicable members and program, which is
currently 13,338. You multiply that by the percent of
residents who are veterans, which is approximately 10
percent. Finally, you multiply the percent of veterans
who are permanently and totally disabled, which is
about 3.6 percent. After doing so, one can estimate
the total number of totally and permanently disabled
veterans with a PERS account to be approximately 48
people.
It's my belief that allowing approximately 48 disabled
veterans who have a significantly reduced life
expectancy to access their hard earned retirement
funds, will in no way cause an undue hardship on the
PERS system. In conclusion, I humbly ask each of you
to stand united and vote in favor of HB 232. Remember,
it's less than 4 percent of all veterans that have
that designation of totally and permanently disabled.
Yet this modest change will be very impactful in
supporting their wellbeing.
Mr. Whisenhunt was available for questions and thanked the
committee for its service.
4:40:35 PM
Representative Hannan thanked Mr. Whisenhunt for doing the
math. Her primary concern was about the number of people
the bill impacted because the definitions were very narrow.
She looked at the fiscal note and stated her understanding
that the bill allowed a veteran to use the military service
time if they were fully disabled due to combat time to draw
their Public Employees' Retirement System (PERS) benefit.
She observed that the fiscal note seemed to say that a
health benefit was not included. She asked if individuals
with a service related full disability would already be
eligible for full medical coverage through the VA.
Mr. Whisenhunt responded affirmatively.
Co-Chair Foster asked for closing remarks from the bill
sponsor.
Representative Rauscher thanked the committee for hearing
the legislation. He stated that it was tough for service
men and women who defend Americans' lives to get through
some of the things people took for granted such as jobs,
income, and providing for their families. He appreciated
the committee's consideration of the bill.
Co-Chair Foster set an amendment deadline for Tuesday,
April 30 at 5:00 p.m.
HB 232 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 260
"An Act repealing programs for catastrophic illness
assistance and medical assistance for chronic and
acute medical conditions."
4:43:46 PM
AT EASE
4:44:30 PM
RECONVENED
Co-Chair Foster invited the bill sponsor and staff to come
to the table.
REPRESENTATIVE WILL STAPP, SPONSOR, introduced himself.
HONOUR MILLER-AUSTIN, STAFF, REPRESENTATIVE WILL STAPP,
introduced herself.
Representative Stapp explained that he had been going
through the operating budget book and in light of the SNAP
[Supplemental Nutrition Assistance Program] backlog he had
visited some of the Division of Public Assistance (DPA)
facilities in Fairbanks and across the state to try to
determine what kind of administration burden was plaguing
the Department of Health (DOH). In his conversations with
department staff, he had discovered the Catastrophic Acute
Medical Assistance (CAMA) program. He had been told by the
DPA office in Fairbanks that there was no one on the
program, yet the office still had to process applications.
He had discovered that in the past several years there had
only been one person in the program. In response, he had
asked the department a series of questions including the
number of applications it processed for CAMA in the
previous year. The department responded that it processed
6,226 applications and had approved no one. He thought it
seemed administratively wasteful and wondered how no one
qualified for the program.
Representative Stapp explained that the nucleus of the
program was effectively rendered outmoded when the
Affordable Care Act (ACA) passed, and Medicaid expansion
occurred. He explained that individuals enrolled in CAMA
basically fell off a cliff post-2015 in Alaska. He
elaborated that CAMA was designed for individuals who did
not qualify for Medicaid and could not get health insurance
on their own. There was a negative fiscal note associated
with the bill. He asked his staff to review the sectional
analysis.
4:47:42 PM
Ms. Miller-Austin reviewed the sectional analysis (copy on
file):
Section 1 Amends existing legislation to remove
references to programs for catastrophic illness
assistance and medical assistance for chronic and
acute conditions.
Section 2 Allows the issuance of subpoenas for
investigations related to medical assistance programs
removing references to repealed programs.
Section 3 Requires providers to grant access to
records for medical assistance recipients and allows
audits with adjustments for the repealed programs.
Section 4 Defines medical assistance fraud and
specifies offenses related to medical assistance
programs, updating references to the repealed
programs.
Section 5 Addresses exclusion from medical assistance
programs based on certain offenses with adjustments
for repealed programs.
Section 6 Updates the definition of medical assistance
program to exclude the repealed programs.
Section 7 Updates the definition of medical assistance
provider to include the repealed programs.
Section 8 Updates the definitions of services to
exclude the repealed programs.
Section 9 Adjusts regulations for civil history checks
to exclude references to the repealed programs.
Section 10 Repeals specific sections of existing law
related to the repealed programs.
Section 11 Specifies the applicability of amendments
to offenses committed after the effective date of the
act.
Section 12 Provides transition provisions for ongoing
investigations and access to records related to
services provided before the effective date of the
act.
4:49:20 PM
Representative Hannan asked how the state received
applications from 6,226 people for a program that no one
was eligible for. She was concerned that there was a group
of people that should have been walked through a different
program. She asked if the individuals got there on their
own.
Representative Stapp responded that statute required it to
be on the front page of the application. He elaborated that
when a person went to the DPA office to fill out an
application, there were "a bunch of boxes that people can
check." He detailed that often when individuals applied for
public assistance, many people checked all of the boxes on
the form. He expounded that when a person checked all of
the boxes on the form the department was required to
investigate whether or not an individual qualified for the
program. He explained it was the reason for the high number
of applications and so few approvals. The bill would repeal
the program because it was the only way he could get the
box for the [CAMA] program removed from the form.
Representative Josephson asked if the box individuals
checked "was their entrée to Medicaid expansion or the
Affordable Care Act."
Representative Stapp responded, "No." He explained that
there was a series of different boxes on a one-page form
including things like SNAP and Medicaid. He stated that one
box was for general relief and another was for CAMA. He
stated that there were individuals who checked all of the
boxes on the form that eligibility technicians referred to
as shotgun applications. He elaborated that the forms were
multiple pages with a lot of information the applicant
needed to fill out. He stated it was not really
unreasonable to think that when an individual reached the
"check the box portion" of the form that they checked all
of the boxes without giving that much thought to the
process.
Representative Josephson asked if the burden of telling
individuals they did not qualify for something (but they
would qualify for something else) was $154,000 per year.
Representative Stapp answered that two things were
occurring. One was the appropriation on the grants and
benefits line. He noted that the budget book showed that
the actual for FY 23 was $1.00. The legislature
appropriated the money in the grants and benefit lines as
if people would qualify for the program, but because no one
did, the money lapsed or the department had authority to
move up to $10 million around; therefore, sometimes the
money was likely spent through the RSA [Reimbursable
Services Agreement] process. He relayed that the real cost
to the program was in the processing time of DPA
technicians. He had asked the department how long it took
to process one of the applications on average. The answer
was 90 minutes and was included in writing in members' bill
packets. He relayed that multiplying $6,226 times 90
minutes resulted in about 13,000 man hours. He expounded
that based on the average wage of a DPA technician, the
cost was around $400,000 in administrative time and payroll
as opposed to the grants and benefits line shown in the
fiscal note. He remarked that one of the fascinating things
about being on the House Finance Committee was that the
committee just saw the money allocated to the line item and
it did not see the cost of administering the program.
4:53:20 PM
Co-Chair Foster OPENED public testimony.
Co-Chair Foster CLOSED public testimony.
4:54:18 PM
Representative Galvin referenced the sponsor statement
(copy on file) and observed that two applicants had
qualified for the program in 2021 after ACA. She asked why
and what happened to the individuals.
Representative Stapp deferred the question to his staff.
Ms. Miller-Austin responded the individuals fell into the
window of the five-year waiting period where individuals
coming to the United States from another country could not
qualify for Medicaid during that time period.
Representative Galvin remarked that the U.S. had recently
seen quite a few people coming in from Ukraine, Somalia,
and other countries. She asked if rules had been changed
meaning there would never be a similar situation to the two
individuals who qualified [in 2021].
Representative Stapp responded that there was a very slim
window of individuals who could in theory still qualify for
CAMA; however, the individuals qualified for health
insurance through the ACA. He stated that having CAMA as
opposed to a policy through the ACA was more
disadvantageous for the individual, especially because it
was income based. He detailed that the [two] individuals
were eligible for CAMA because of certain standards, but
refugees were exempt from the five-year waiting period on
the Medicaid program. He explained that the situation
basically involved legal immigrants who had not been in the
state for five years. He relayed that those individuals
were also legally eligible for ACA. He stated that in terms
of the best interest of the individual, it was much more
advantageous for them to buy a policy through ACA.
Representative Galvin referred to the potential for new
leadership in the U.S. government later in the year and the
possibility of ACA going away. She asked if the scenario
would mean the state would look at going back to using
CAMA.
Representative Stapp responded that even if it were
possible, the program should not be designed like CAMA. He
considered a scenario where ACA was eliminated. He stated
it would then be necessary to unwind Medicaid expansion. He
suggested that under the scenario the state should create a
program similar to the old CHIP program the state used to
have. He stated that CAMA was an antiquated program. He
deferred to his staff to provide additional detail on the
program's history.
Ms. Miller-Austin responded that the program was designed
to help middle class recipients who were too young for
Medicare and with incomes too high to qualify for Medicaid
who were not covered by health insurance or whose insurance
was insufficient to withstand a catastrophic illness
episode without jeopardizing their financial resources,
livelihood, and essential assets. She added that CAMA was
established in 1986. She noted that since that time how
coverage was obtained had progressed.
4:58:58 PM
Representative Galvin understood that Medicaid expansion
and other things had helped fill the gap since then. She
referenced the 13,000 man hours Representative Stapp
discussed. She presumed that some of the applicants would
need some sort of referral and would still need to fill out
an application for a different program within DPS. She
wanted to ensure that Representative Stapp had consulted
with DPS on the topic.
Representative Stapp answered that the department did not
break out the programs individually, which he believed was
a mistake in how it tracked workflow. He remarked that he
had another bill addressing the issue. He stated that all
he could do was compare the answers from the department
with the number of applications. He suggested that the next
legislature consider mandating the department to track its
workflow in order for the legislature to better understand
how long and arduous the process was and to look for
efficiencies, especially with a department that had a lot
of trouble with administrative workload.
Representative Galvin asked if Representative Stapp
consulted with DPA and if the director agreed his
conclusions made sense.
Representative Stapp responded affirmatively.
Co-Chair Foster thanked the bill sponsor.
HB 260 was HEARD and HELD in committee for further
consideration.
5:02:04 PM
AT EASE
6:05:33 PM
RECONVENED
HOUSE BILL NO. 368
"An Act relating to clean energy standards and a clean
energy transferable tax credit; and providing for an
effective date."
Co-Chair Foster invited the bill sponsor and staff to the
table. He asked for a brief recap of the bill.
6:06:43 PM
Representative Rauscher thanked the committee for hearing
the bill. He remarked that the bill was critical in
addressing a pressing economic and strategic issue facing
the state. He discussed that the reserves of economically
recoverable natural gas in Cook Inlet were dwindling. He
stated it was not only an environmental issue, but a matter
of economic security and energy independence for Alaska.
The bill was about preparing the state for the future,
ensuring it was not caught off guard as energy landscapes
evolved. He noted there were currently multiple pieces of
legislation focusing on various angles of the issue to
address different parts of the solution. He stated that HB
368 was one part of the solution. The bill proposed a
strategic shift toward diversifying the state's energy
sources. He detailed that it was about making practical
investments in technologies that could sustain Alaska's
energy needs for the long-term including hydrogen, coal,
micronuclear energy, wind, and solar. He wanted to focus on
how the bill could bolster the state's economy and energy
autonomy, reduce reliance on single sources, and keep
Alaska's robust and competitive on the national stage. He
highlighted that it was about prudent planning and ensuring
a stable, prosperous future for all Alaskans. He thanked
the committee and asked to hear from his staff.
6:09:23 PM
CRAIG VALDEZ, STAFF, REPRESENTATIVE GEORGE RAUSCHER,
explained that the bill would create a clean energy
portfolio standard, setting benchmarks for the amount of
clean energy and the definitions of the energy, for
increased amounts on the Railbelt. The bill would add clean
energy transferrable tax credits, an incentive to build and
produce clean energy to offset dwindling natural gas
supplies. The bill would add statutory language for net
billing as well as definitions.
Co-Chair Foster asked to hear from Ian Walsh with
Legislative Legal Services regarding his legal memorandum.
6:10:31 PM
IAN WALSH, LEGISLATIVE COUNSEL, LEGISLATIVE LEGAL SERVICES
(via teleconference), went through the legal memo dated
April 24, 2024 (copy on file) that explained one possible
issue Legislative Legal Services had identified with the
legislation. He explained that the issue pertained to the
Alaska Constitution's restrictions on enacting local and
special legislation. The constitution specified that "the
legislature shall pass no local or special act if a general
act can be made applicable." He stated that many of the
bill's provisions focused on the Railbelt and some focused
on particular areas of the Railbelt such as the Copper
Valley Electric Association. He elaborated that the bill
may be considered special legislation; therefore, it would
be important for the bill to survive constitutional
scrutiny to ensure that the legislative record showed there
was a fair and substantial relationship to the
classifications established by the legislation.
Representative Ortiz asked Mr. Walsh to further explain his
last statement in simpler terms.
Mr. Walsh replied that it was difficult to provide simpler
language for the test that had been established for the
constitutional provision. He explained that the special
aspect of the legislation had to have relationship to
legitimate purposes. He elaborated that if the legislature
could show why there needed to be a special aspect of the
act and that a more general act could not be made
applicable under the circumstances, the bill could survive
the constitutional scrutiny.
Co-Chair Foster stated his understanding of the explanation
with an example. He detailed that if the bill specified
that the tax credits were available to the Railbelt or for
Homer it would be seen as being too specific. He stated his
understanding that the laws should be more like "these tax
credits are available to the entire state or populations
under 5,000 or something" instead of being something
specific to Homer for example.
Mr. Valdez agreed with the explanation provided by Co-Chair
Foster. He relayed that the bill's language was built for
any existing ERO [Electric Reliability Organization]. There
was currently only one ERO, but the original statutory
language written several years ago allowed for any one
organization to be created in any part of the state. He
reiterated that there was currently only one ERO, which may
change in the future. He noted it was broadly applicable at
present.
6:14:07 PM
Representative Stapp directed a question to Mr. Walsh. He
thought the legislature did that all of the time already.
He elaborated that there were rules about taxation on the
North Slope, Middle Earth, and Cook Inlet, which were all
geographic regions. He added that the Alaska Marine Highway
System (AMHS) did not go to Nome in the summer. He asked
Mr. Walsh to provide clarification.
Mr. Walsh responded that it was not a prohibition on
enacting local and special legislation, just a restriction.
Under the circumstances, there were likely very good
reasons why a more general act or more general provisions
could not be made applicable. He stated that without
knowing more detail he could not be sure, but presumably
the way those programs were implemented would provide
constitutional scrutiny.
Representative Stapp asked for the difference between
restricted and prohibited. He viewed the words as meaning
the same thing.
Mr. Walsh answered that it was not an all-out prohibition
on local and special legislation, the constitutional
language (Article 2 Section 19) required that a local and
special act could not be enacted if a general act could be
made applicable.
Co-Chair Foster recognized Representative Jesse Sumner in
the room.
Representative Ortiz noted that HB 307 had been heard the
previous day and included the word "Railbelt" numerous
times throughout the bill. He did not understand why the
committee did not receive the same legal warning for HB
307. He asked what made HB 368 different.
Mr. Walsh agreed that there were many bills including HB
307 that dealt with specific geographic areas of the state.
The constitutional provision applied to any legislation
that the legislature might pass. The reason he had written
the legal memo to HB 368 in particular was because some of
the provisions in the bill focused on the service area of
the Copper Valley Electric Association so it may not be
considered a statewide application. He stated it was a bit
challenging to give firm conclusions under the provision
and circumstance.
Co-Chair Foster asked if the legal memo had arisen because
the question had been posed by someone on the committee. He
asked his staff to respond.
6:17:43 PM
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER,
responded that a request had been made by committee members
in response to the plethora of energy legislation coming
before the committee in the past two weeks. He relayed
there had been questions about some of the legal
applications in regard to how the bills interacted with one
another. A request had been made for the committee to
request any legal memos that may have come up during
conversations in prior committees and/or would accompany
bills coming to the House Finance Committee. He had put out
a blanket request that if there were any issues raised or
possibly could be raised for all of the energy bills that
they should be submitted to the co-chair's office.
Co-Chair Foster reiterated Mr. Anderson's statement that
the memo was a blanket [request] because it applied to a
couple of other bills as well. He viewed the issue as
Legislative Legal advising the committee to keep the issue
in mind, but he did not hear them saying, "this is an
issue."
Representative Hannan directed a question to Mr. Walsh.
She was trying to find the specific places in HB 368 that
raised the concern. She looked at the reference to the
Railbelt service area and Copper River Valley Association
on page 4, lines 27 and 28. She did not see another
reference until page 9 where Railbelt was defined as Kenai
to the Interior. She asked if there were other references
in the bill that Mr. Walsh believed contributed to the
concern.
Mr. Walsh responded that he believed the instances
highlighted by Representative Hannan were the only
occurrences he was aware of that would contribute to the
concern. He agreed with Co-Chair Foster that it was a
possible issue to take into consideration, but not
something that would prevent the legislature from passing
the legislation. He stated that the memo was mostly a
suggestion that the record should be sufficient to justify
the focus on the local issues.
Co-Chair Foster asked to hear from two invited testifiers.
6:20:49 PM
JULIE ESTEY, CHIEF STRATEGY OFFICER, MATANUSKA ELECTRIC
ASSOCIATION, PALMER (via teleconference), stated that
Alaska was at a critical point in energy with uncertainty
in the natural gas supply. On the plus side, there were new
innovative power options that were available currently or
on the horizon. She listed energy sources such as nuclear,
energy storage, and new ways of making old generation such
as coal and gas more efficient. Additionally, renewable
energy, which had struggled to be competitive in the past,
was currently able to compete more closely with some of the
projected fuel costs. There was also a large amount of
federal funding available, which cut the cost in half for
[Matanuska Electric Association (MEA)] members. She shared
that the association had members asking it to be more
innovative in its energy solutions by looking beyond
traditional supplies and to look for ways to make the
existing gas supply last longer. She stated that luckily
Alaska had a governor and legislature that were invested
and motivated in making changes to allow the state to grow
into a new energy future.
Ms. Estey stated that as MEA looked towards the new energy
future, it realized there were many options on the table.
She explained that almost all of the options had benefits,
costs, and tradeoffs. She elaborated that MEA was actively
working on solutions with gas through the gas working
group, collaborative projects with other utilities, and on
its own efforts. She stated that individual utilities could
not and should not go alone. She expounded that gone was
the luxury of just thinking about its own ratepayers and
service territories. The association was now accountable to
the system, region, and the rest of the state.
Ms. Estey shared that MEA appreciated the governor's
leadership in forming the energy taskforce, which she had
spoken about the previous day. There were three primary
recommendations including the transmission unification,
growing load, and to diversify generation. She elaborated
that it included looking at innovation opportunities and
the gas supplies, energy security and resilience, and
keeping energy costs competitive. The first action listed
under the strategy in the report was to develop a clean
energy standard with incentives instead of penalties. The
recommendation was made after meetings and the public
process and for input from the National Renewable Energy
Lab indicating that cooperatives be opted out of any
penalties. She relayed that two legislators, Senator Click
Bishop and Representative George Rauscher, were on the
taskforce. She appreciated that the two legislators had
asked how to realize the recommendations. She highlighted
that SB 257 had come out of the Senate Resources Committee
[2024 legislation pertaining to electric utility
regulation]. She relayed that MEA appreciated
Representative Rauscher's sponsorship of HB 368 to make
some of the concepts and recommendations actionable.
Ms. Estey relayed that MEA had established its own goal of
50 percent clean energy by 2050. The association viewed it
as a realistic goal and aspirational stretch to the
limitations of the existing electric system, rate making
realities, current regulatory and permitting environments,
Alaska's harsh environmental, and lessons learned from
other countries and states that did too much too soon
without fully understanding the unintended consequences.
The association appreciated that HB 368 aligned with MEA's
target.
Ms. Estey shared that MEA appreciated the bill's reachable
goals. She detailed that if the goal was good policy, it
should be a catalyst for change and should not set up the
industry to fail. She elaborated that many states and
countries started with modest goals and increased as
lessons were learned, and trust was gained. She relayed
that many states had some sort of renewable portfolio
standard, clean energy portfolio standard, or carbon
reduction goals, many were far less aggressive than "this
one," although some were more aggressive. The association
also appreciated the key role transmission played. She
shared that the state's constrained system was a limiting
factor. She explained that progress could be made with the
constrained system, but it was limited. She detailed that
MEA had the opportunity to lower cost and risk to members
through economies of scale of sharing projects between
utilities. Transmission improvements would be necessary to
achieve big goals without incurring costs or relying on
unproven technology.
Ms. Estey relayed that MEA appreciated provisions that
counted progress in the standard and the ability to waive
requirements if MEA was doing its best, but things were not
working out. She stated that even the best projects
experience delays. One of the association's favorite
projects on the system was the Houston project, the largest
utility scale solar project. She detailed there had been
very willing participants and MEA was excited to work with
the developers. There were great financing teams, the
borough leased the land to the project, and MEA got a
contract through to the Regulatory Commission of Alaska
(RCA). She noted that world events and financing and supply
chain issues had slowed progress; therefore, the project
took longer than anticipated. She added that projects would
not all run into those delays, but it was an example that
there should be acknowledgement of progress even if there
was something beyond control. She stated HB 368 allowed for
that. Additionally, the bill allowed for a calculation for
net metering energy. She described net metering energy as
rooftop solar or individual homes with small wind turbines.
Ms. Estey highlighted that MEA supported member choice and
believed distributed energy systems could be a component of
meeting future energy needs. She stated it allowed for a
provision to consider a guesstimate of the total fuel
offset rather than what came back through the meter. She
detailed that it was an acknowledgement that even though
someone may only sell a portion of the power back to the
utility, it was offsetting a great deal more gas on their
side of the meter. She stated that MEA appreciated the
provisions in the bill that allowed that to happen. The
provisions also allowed for energy efficiency, which was
key. She stated that the cheapest fuel was the fuel that
did not have to be burned. She remarked that energy
conservation efforts to reduce consumer demand or the
amount burned through efficient generation should be
reinforced. The bill reinforced collaboration among the
utilities to achieve goals. True to the taskforce
recommendation, the bill included incentives in the form of
tax credit to incentivize change and help with project
economics. The bill also included a provision for net
billing. She detailed that it allowed the RCA to vary the
rates MEA could pay back to members based on how helpful
the energy was at any given time. She explained that it
decreased the potential for cross subsidization between the
haves and the have-nots. Additionally, it made room for
other technologies. She stated that MEA's diversification
goals included an "all of the above" approach. She
highlighted that MEA was working with Golden Valley
Electric Association (GVEA) on a wind project and it was
also coordinating with the association on possibly using
coal. She relayed that when MEA surveyed its members,
typically 65 to 75 percent responded they wanted to see
more power with clean energy, but cost and reliability were
consistently listed as the top priority.
6:30:35 PM
Ms. Estey continued that all of the options needed to be
left on the table to meet growing power needs despite the
uncertainty of Cook Inlet gas supply in the small
vulnerable grid. The association believed the bill allowed
for a full complement of fossil fuel, thermal based
generation sources, and clean energy. The bill provided
MEA's board with general state direction balanced with
local control and flexibility to make the best choice for
members.
Ms. Estey received two primary questions about the bill.
The first was about coal being in a clean energy bill. She
agreed it was creative and MEA had not seen it in another
clean energy bill. She also believed it was recognition
that "these are crazy times." She stated it was nice to
have all options on the table. She remarked on a
consideration of importing LNG in a resource rich state.
She remarked that mine mouth coal likely had a lower
environmental footprint than importing LNG, likely at a
lower cost, and at lower risk. She added that it would keep
money in the Alaskan economy. She reiterated that MEA
wanted all options on the table. She stated it was not the
right time to label energy as good or bad.
Ms. Estey stated that the second question she received was
whether the bill was necessary. She viewed it as solving an
old problem in some ways. She elaborated that up until very
recently clean energy was a nice thing to have and people
believed the utilities were not moving fast enough. She
relayed that with the recent announcement by Hilcorp and
the uncertainty around natural gas, it brought market
forces to play to solve the problem that often moved the
needle much faster than policy: scarcity and price
sensitivity. The association agreed with Chris Rose that
alternate forms of energy including renewables and other
clean energy could start competing with traditional fossil
fuel options at the projected fuel prices. The association
also agreed that scarcity and price sensitivity would allow
economics in the free market to naturally drive a more
diverse energy portfolio.
Ms. Estey relayed that MEA also understood there was a
benefit in the legislature and governor setting a standard
to give clear directions, certainty, and market signals.
She stated it could provide direction to the RCA and co-op
board to make bold moves toward the common vision of an
energy transition. She communicated that MEA believed the
bill contained a common sense clean energy standard that
was pragmatic, aspirational, and flexible. The association
believed it could act as a catalyst for energy transition
for diversification and stabilization of cost. She
communicated that reliability was key and keeping the
lights on was essential. The association could not support
any legislation that jeopardized its certificated
responsibility and commitment to its members. The
association believed the bill took those things into
account. She concluded that while other voices were
critical to the process and developing solutions, it would
be the MEA board and the legislature who would be
accountable for the success or failure of the energy
transition going forward. The association appreciated being
part of the solution.
6:34:49 PM
Representative Hannan asked about MEA's energy goal by
2050. She asked Ms. Estey if the 50 percent goal was for
renewable or clean energy.
Ms. Estey responded that it was clean energy. She noted
that the MEA board did not define the term.
Representative Hannan in the bill under clean energy could
include gas, oil, nuclear, or coal as long as it involved
sequestering an equal amount to producing. She asked if
those options had been discussed by the MEA board and were
included in its goal.
Ms. Estey answered that the MEA board did not provide
specific direction on the specific technology. She stated
it was a future conversation MEA was hoping to have once
there was a better picture of the diversification options
on the table. She elaborated that MEA staff was taking the
more common broad-based approach to clean energy, which
included renewables and some of the newer technologies to
mitigate some of the carbon and manage some of the carbon
in its traditional fossil fuels. She noted that the board
had not provided any direction on the topic.
Representative Hannan asked if the MEA board had discussed
that it should include coal and oil and gas (as long as it
was sequestering) when the board developed the clean energy
policy.
Ms. Estey responded that there were some broad
conversations and individual comments made about specific
technologies. She communicated that reliability and cost
were the number one priority for members, which was
important to the board. The association was hoping to
consider an "all of the above" choice; currently a whole
suite of options was on the table. She stated that the 50
percent goal meant 50 percent could be from clean energy
and 50 percent could be from thermal traditional resources
currently in use. She relayed that MEA was currently at 15
percent renewable energy and 85 percent thermal generation
through natural gas. She added that MEA used some diesel
and could switch to diesel in an emergency situation.
6:37:44 PM
Representative Galvin referenced a statement made by Ms.
Estey about doing too much too soon without understanding
unintended consequences. She asked for further explanation
of the statement.
Ms. Estey responded replied that in the past there were
other bills that suggested some more aggressive goals. She
considered the realities of integrating new kinds of power
in MEA's system as well as the limited transmission system
and the development timeline. She explained it was a
reference to ensuring there was a realistic timeline. She
relayed that MEA was very price sensitive. She detailed
that 75 percent of its members were residential and
included small businesses and families. The association
wanted to make sure there was a long enough time horizon to
allow time to transition properly and that cost and
reliability were not negatively impacted on the way to that
future.
Representative Galvin she was thinking about the next
generation and 2050 felt really far out. She congratulated
MEA for being at 15 percent [renewable energy] already. She
understood they did not want to be too aggressive but at
the same time she wanted to make sure a statement was being
made that the state was moving ahead into the next
generation of energy. She referenced Ms. Estey's statement
that some project delays resulted from circumstances that
were no one's fault. She asked how many years it would take
to develop a large solar project.
Ms. Estey responded that MEA was looking at gas contracts
shifting and changing by April 1, 2028. The association was
keenly aware of a timeline and was working as fast as it
could to try to decrease the amount of gas it had to use
immediately and to plan for that future. She remarked that
there were some obstacles in the way including supply chain
issues (it now took a couple of years to get some of the
necessary electrical components), permitting associated
with putting up a windfarm including the ability to get
barges through Cook Inlet and potential impacts on
wildlife. She relayed that currently there was scarcity in
the market and economics were a factor. She explained that
it would drive more immediate action even more than policy
because the things were needed now. She hoped they could
get there faster, but she also understood that at higher
penetration levels, additional transmission would be
needed. She mentioned economic and technical constraints of
the transmission system in the capacity and redundancy that
could be relied upon when using power from other places.
Additionally, there were the economic distortions of
wheeling and how it impacted price. Many of the things
needed to be moved around and ideally out of the way in
order to move forward as fast as possible. She agreed, the
sooner the better.
Representative Galvin highlighted key words used by Ms.
Estey including reliability, cost, redundancy, capacity,
and things around supply chain, which was related to
permitting as well. She referenced a large hydro project in
Susitna that had not begun and was possibly dead. She
considered that if it was built, it would likely be
finished by 2050. She asked if her understanding was
accurate.
Ms. Estey believed the answer was yes but would need to
confirm with others on the timeline. She relayed that there
were a lot of hurdles with the specific project, especially
with permitting and financing. She explained that the
transmission system would need to be overhauled in order to
move that kind of power. She added that there were some
people in the MEA service territory who were very opposed
to the project; therefore, there were likely legal hurdles
as well. She stated that the answer was, "Possibly." She
believed that it would be necessary to decide what
direction the state wanted to go. She highlighted that
large hydro or nuclear projects were not something MEA
could do on its own; it would require collaboration with
other utilities or more likely, collaboration with the
state to pick a path. She relayed that MEA looked forward
to having the discussion with the governor and legislature
on what the path could look like and how to move forward as
a state.
Representative Galvin thanked Ms. Estey for her helpful
perspective.
Co-Chair Foster asked to hear from the second invited
testifier.
6:46:00 PM
JEREMY KASPER, DIRECTOR, ALASKA CENTER FOR ENERGY AND
POWER, UNIVERSITY OF ALASKA FAIRBANKS (via teleconference),
thanked the committee and bill sponsor for their work on
the bill. He remarked that Ms. Estey had done a great job
covering a lot of the basics of the bill. He provided
prepared remarks:
The Alaska Center for Energy and Power is an applied
research institute at the University of Alaska
Fairbanks with a mission to develop and disseminate
practical, cost-effective, and innovative energy
solutions. We have active projects across a wide range
of energy subject matter areas including a recent
effort with the utilities to analyze multiple
scenarios for decarbonizing the Railbelt electric grid
while ensuring the system could continue to operate
reliably and cost-effectively. There are a number of
important energy policy decisions before this
committee. Yesterday we heard about House Bill 307,
which relates to terms as how we manage our
transmission network, and I know you have hearings on
that coming up next week as well. The bill before us
now, HB 368, addresses the complimentary aspects of
the Railbelt grid and clean energy standard. My goal
today is to provide insight into the potential
benefits and considerations associated with renewable
portfolio standards (RPS) as well as clean energy
standards as policy mechanisms available for Alaska's
energy landscape. My colleague Miss Gwen Holdmann is
scheduled to testify on Monday.
As we consider options for our state it's helpful to
understand the difference between the policies. An RPS
is a binding requirement for electric suppliers to
procure a minimum percentage of energy generation,
knowledgeable renewable energy sources. The RPS
generally includes penalties, which in the case of co-
ops, they potentially flow directly down to the
customers. While similar to an RPS, the clean energy
standard usually considers a broader set of eligible
technologies and the focus of the CES is not just on
renewable energy, but also typically low or zero
carbon emitting energy sources. Things like nuclear or
abated coal (basically coal with carbon capture). If
effectively implemented, both an RPS and a CES present
the opportunity to displace natural gas for power
generation usage and conserve Cook Inlet natural gas
for later use in home heating in the Anchorage area.
Most of the Railbelt utilities have already adopted
some voluntary targets for adding renewables or
reducing carbon output. Some of this is driven by
industry demand. For example, two of the most
important customers with GVEA are Fort Knox and Pogo
Mines. If one of these operations were to shut down,
it would result not just in the loss of local jobs,
but the cost to deliver power to other GVEA customers
would increase considerably. Having those industrial
customers helps keep cost at a minimum for all
consumers. Many industries are setting their own
internal carbon targets for their operations. For
example, Santos has committed to operating the Pikka
field at a net zero operation. Kinross, which owns and
operates Fort Knox along with many other mines around
the world has also set aggressive targets for
decarbonizing their global operations. Their Fort Knox
operation is one of the most carbon intensive
operations they have and that is certainly a factor
that industries will take into account whether to
invest in Alaska. Several of the committee members
joined myself and other ACEP staff to Iceland late
last year. That is a country with cheap clean energy,
and they are turning away industry because they can
afford to choosey and there are limits on available
power. I hope someday Alaska will be in that enviable
position, but that will require thoughtful policy
choices including those before this committee now.
6:50:32 PM
Mr. Kasper continued to provide prepared remarks:
The final report of the governor's Alaska Energy
Security Taskforce underscored the urgency of
diversifying our energy sources and bolstering our
energy advance. One of the recommendations from the
Railbelt subcommittee was to establish a clean energy
standard, so I'm happy to see that bill before the
committee now. Toward these ends both ACEP and the
National Renewable Energy Laboratory recently
completed studies of future electricity generation
scenarios for the Railbelt, what they might cost and
how they might work on the Railbelt grid.
Both studies concluded that a diverse mix of fossil
fuel power plants and new technologies such as hydro,
wind, nuclear, and tidal meet the Railbelt's future
electricity needs while dramatically cutting the fuel
cost of power; however, achieving these fuel savings
requires major capital investment. An RPS or a CES can
help by providing a clear market signal that may
attract private sector capital and private sector
development of the clean energy industry.
It is also important to recognize that implementing an
RPS and/or a CES may have varying impacts depending on
the specific context of Alaska's energy sector and
economy. While these policies offer potential
benefits, they also present challenges and
considerations that merit careful evaluation. Factors
such as cost to ratepayers, reliability, resource
availability, technological readiness, stakeholder
engagement, and other economic considerations should
be thoroughly [inaudible] to determine the most
suitable approach for the state.
Mr. Kasper concluded it was essential to approach policies
with a balanced perspective, taking into account the
state's diverse needs and priorities and by carefully
evaluating potential benefits and challenges. He stated it
would result in more informed decisions that would
contribute to a more sustainable and resilient process and
future for the state.
Co-Chair Foster thanked Mr. Kasper for his testimony.
6:52:58 PM
Co-Chair Foster OPENED public testimony.
6:53:30 PM
KEN HUCKEBA, SELF, WASILLA (via teleconference), stated
that Ms. Estey had not disclosed her association with the
Renewable Energy Alaska Project (REAP). He rejected the
idea that the state needed to do anything with carbon
control. He believed Alaska had such a miniscule footprint
and the costs did not come with metrics on what would be
accomplished. He did not know "why we're chasing all of
these things" when the state had reserves to do otherwise.
He stated that MEA did not have 15 percent renewable energy
sources when taking out the dam they wanted to tear out. He
remarked that MEA wanted to take a credit for renewables,
but it wanted to take them out at the same time. He stated
that wind and solar were the current renewable energy
sources in Alaska and that they run 11 to 42 times cost of
what many studies projected. He considered the cost and
federal money and stressed that residents paid the taxes
too. He underscored that the energy sources were
exorbitantly expensive and unreliable. He remarked that
individuals had never seen a cost analysis on improving
reliability. He remarked that individuals were being told
it would cost hundreds of millions of dollars to do
renewables at the cost of ratepayers and the state to
receive matching funds. He stated that renewables were not
affordable.
Mr. Huckeba stated that the MEA board met quarterly and
discussed whether or not rates needed to be increased. He
detailed that it was based on the inflow of revenues from
electrical sales. He stated that a large portion of
electrical sales would go to profiteers out of state and
the money would not be rolled back in to pay for
infrastructure in Alaska. He thought it was inappropriate.
He remarked that the Watana Dam could be up and running in
about four years according to the MEA website and there
could be a gasline and use existing infrastructure. He
never saw a cost analysis on what it would cost to use
existing infrastructure for gas even if it was imported. He
referenced statements that it was expensive, but he had not
seen figures. He remarked that the money for supply chain
for many renewables was going out of state.
Mr. Huckeba would like to see an amendment to the
legislation so that none of the credits went to foreign
entities or investors. He reiterated his objection to the
carbon narrative. He thought the state should do things
better than wind and solar. He elaborated that the capacity
factor at the large wind farm in Delta was about 11
percent. He highlighted that on the coldest days it had
only generated 2 percent capacity. He stated that residents
were being told that the energy sources would be cheaper,
but the transmission and storage had to be built out to
make them viable. He emphasized that Alaska had dark, cold,
and inclement weather, meaning the storage required would
be extremely expensive in the trillions of dollars. He
supported the use of gas and coal without carbon
sequestration. He stated that the governor was bragging
about getting rid of emissions requirements on
transportation. He wondered why he could not do it here as
well. He thought the legislature should strive for that. He
remarked on Alaska's minimal footprint and did not want to
see it absorb costs for changes to its infrastructure. He
thanked the committee for its time.
6:59:25 PM
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster set an amendment deadline for HB 260 for
noon on Monday, April 29.
Representative Coulombe asked if any members intended to
submit amendments.
Representative Josephson requested time to look at the
bill, but he would likely not file an amendment.
Co-Chair Foster set an amendment deadline for HB 368 of
Wednesday, May 1 at 5:00 p.m.
7:02:29 PM
Representative Rauscher clarified that the bill would not
replace hydrocarbon or coal usage. It would merely offer a
different source alongside the existing sources. He
highlighted that Cook Inlet was currently running out of
available gas. There were other bills moving forward to try
to "push those forward and make that more of a successful
campaign." He explained that HB 368 provided another
diversification that could be utilized in the future to use
less gas, making more available for heating at a cheaper
price if more could not be found in the inlet. He
elaborated that it would stave off running out [of gas] as
quickly. Additionally, he clarified that the bill did not
dictate anything to happen with carbon capture and
sequestration. The bill did not make changes to how coal
was currently burning in powerplants in Alaska and did not
deter the process. He appreciated the committee for hearing
the bill.
Representative Josephson shared that he had prepared five
amendments for another of Representative Rauscher's bills,
HB 223. One of his concerns with HB 368 was that it did not
displace diesel or coal. He viewed it as a problem with the
bill and he believed a number of people in the building
would not find it aggressive enough as an RPS standard. He
requested an amendment deadline of May 2 at 9:00 a.m.
Co-Chair Foster believed it was a reasonable request. He
communicated the amendment deadline would be May 2 at 9:00
a.m.
7:05:26 PM
HB 368 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the following
meeting.
ADJOURNMENT
7:06:49 PM
The meeting was adjourned at 7:06 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB260 Additional Documents-January 2024 Dept of Health 01.31.2024.pdf |
HFIN 4/26/2024 1:30:00 PM |
HB 260 |
| HB260 Sectional Analysis 02.01.2024.pdf |
HFIN 4/26/2024 1:30:00 PM |
HB 260 |
| HB260 FY25 Gov Operating Budget for DOH 02.01.2024.pdf |
HFIN 4/26/2024 1:30:00 PM |
HB 260 |
| HB260 Sponsor Statement 02.01.2024.pdf |
HFIN 4/26/2024 1:30:00 PM |
HB 260 |
| HB 368 Legal Memo 042424.pdf |
HFIN 4/26/2024 1:30:00 PM |
HB 368 |